Woolworths Limited v Mark Konrad Olson & Anor

CATCHWORDS : Application to re-open the defendants case CASES CITED : Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471 Woolworths Limited ACN 000 014 675 (Plaintiff) PARTIES : Mark Konrad Olson (First Defendant) Dianne Olson (Second Defendant) FILE NUMBER(S) : SC 50116/04 COUNSEL : Mr RM Smith SC, Mr MA Jones (Plaintiff) Mr RJ Burbidge QC, Mr RM Goot SC, Mr SEJ Prince (Defendants) SOLICITORS : Clayton Utz (Plaintiff) Maddocks (Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

Wednesday 15 September 2004 ex tempore Revised 21 September 2004

50116/04 Woolworths Limited v Mark Konrad Olson & Anor JUDGMENT 1 There is before the court an application by the defendant to reopen his case for the purpose of adducing further evidence. The application is made following the court having reserved judgment on Tuesday, 14 September 2004 in proceedings which were very strongly contested, raising, inter alia, an allegation of fraudulent intent against the defendant and generally concerning the defendant's conduct in having forwarded to a home computer certain emails with attachments, conceded during the hearing to have been confidential. 2 The application is made without a formal notice of motion, and that is unexceptional. The only evidence adduced in support of the application has been a redacted form of an affidavit made on 15 September by Ms MacDonald and a reference by the defendant applicant to a number of particular sections of the transcript taken during the hearing. 3 Leading counsel today appearing for the defendant, Mr Burbidge QC, has contended that leave to adduce the additional evidence should be given to the defendant for the reason that on 14 September leave was granted to the plaintiff to further amend paragraph 16 of the further amended statement of claim by the addition, after the words "30 June 2004", of the words "or 1 July 2004." 4 The submission is that the interests of justice merit the defendant being granted leave to adduce the evidence sought to now be given by Ms MacDonald, the proposition being that the defendant's legal advisers had up to that point in time, conducted the litigation upon the basis that the plaintiff's case as pleaded had been that the relevant fraudulent intent to breach the terms of the service agreement [in the ways thereafter stated in paragraph 16 of that pleading] had been an intent determined upon on or before 30 June 2004 but not on the following day. 5 It seems to me to be highly significant in relation to the subject application that no evidence whatsoever was adduced by the defendant on the application for leave to reopen to this effect. One would imagine that it would have been a simple matter for the defendant to adduce evidence from one or other of his legal advisers to this effect, but it was simply not forthcoming. 6 On the occasion when the application for leave to amend was made, Mr Goot was asked to identify any evidence which he may seek to submit might otherwise have been called but was not able to deal with this matter very specifically nor to deal with the fact that, as it was put to him, there had been an enormous amount of cross-examination during the hearing in relation to what were seen, certainly by the court, as issues in terms of what it was that had occurred on 30 June, 1 July and 2 July. 7 On that occasion there was no indication that the defendant contended that the application for leave to amend should be conditioned on the entitlement, for example, of the defendant to call Ms MacDonald or any other witness, although she was obliquely referred to. Mr Goot indicated that he had not, as I recall it, had an opportunity himself to speak with her. 8 I am unable to accept, bearing in mind the whole of this litigation, that it was otherwise than entirely appropriate and necessary for the defendant if he wished to take this pleading point, to raise the pleading point on innumerable occasions during the course of the hearing. The contention that the defendant was simply entitled to sit back and permit the litigation to continue, always intending to raise this pleading point at the heel of the hunt, simply cannot be accepted in litigation conducted as this particular piece of litigation was. 9 That is not, however, an end to the matter. 10 It is appropriate first to refer to the principles which underpin the proper exercise by the court of its discretion on applications such as the present. 11 In Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471, Clarke JA put the matter as follows:

"Where as here a defendant announced the closing of its case and, there being no case in reply, a short time later sought leave to reopen because its counsel realised he had made a mistake, it is difficult to discern how the interests of justice would be furthered by disallowing an application to reopen to call evidence which was clearly relevant to and may have had a significant impact on the issues in the case.

It is true that the fact that there had been a deliberate decision not to call the witness whose evidence it later sought to lead in a reopened case is a relevant consideration, but there may be a number of reasons why a deliberate decision is made. It may, for instance, be made for tactical reasons. On the other hand, it may be that in the heat of the moment, counsel has inadvertently overlooked facts proven in the opponent's case or has otherwise acted on some misapprehension. Where the failure to lead evidence from a witness whom it is afterwards desired to call results from a tactical decision by counsel, the courts will usually be disinclined to grant an application to reopen. Even in these circumstances, however, the court has a discretion to grant an application by a party to reopen its case and the interests of justice may dictate that the application be allowed. In short, the fact that a deliberate decision was taken for tactical reasons is not decisive but remains an important factor." 12 Reference thereafter was made by Clarke JA to the situation where counsel would inadvertently fail to call a witness, which it seems to me was not what here occurred on the evidence presently before this court on this application. 13 The guiding principle for a court in determining whether to grant an application for leave to reopen is clearly whether the interests of justice are better served by allowing or by rejecting the application. 14 The position which faces the court presently in determining the appropriate exercise of the court's discretion for obvious reasons does have to take into account the circumstance, if this be the dominant circumstance, that a deliberate decision not to call the particular evidence was made. As the High Court of Australia in Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 at 266 made clear:

"If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application." 15 I am clearly satisfied from the evidence tendered during the application by Woolworths that care was taken and a deliberate forensic decision was taken to not call Ms MacDonald, it being reasonably apparent to me that since the evidence given by Mr Olson so very strongly and repeatedly was that he had not learned of the Franklins $200,000 offer until the late afternoon of the Friday 2 July, the calling of Ms MacDonald's evidence would have been seen as a problem for that case. 16 There is an abundance of evidence as to communications between the defendant's solicitors and the McKenzies firm, including communications with, inter alia, Ms MacDonald, and including a very lengthy 12 August 2004 3.00 p.m. conference [where detailed notes were taken] to suggest that the clear and proper inference is that a deliberate tactical decision was taken in this case. 17 To my mind, the circumstance that it was in truth only at the end of the hearing when the plaintiff sought leave to amend the pleading certainly cannot be put completely to the side. It is conventional in litigation for an order to be made tangential on an application for leave to amend, conditioning the granting of such leave to an entitlement in the party against whom the amendment is sought being able to call such evidence as is appropriate in relation to the matter which is the subject of the amendment and otherwise to lead such evidence as may be thought appropriate. Commonly, such a party is also given leave, if necessary, to have certain witnesses recalled to be further cross-examined or examined. Costs of and occasioned by the granting of leave are commonly required to be paid by the party seeking that leave. 18 There is obviously a need in every case to look at the particular significance to the case of a particular issue, and there is a need to permit the true issues and the real merits, factual and legal, to be litigated. In the particular proceedings in respect of which the court is presently reserved, the allegations made against the defendant are grave and serious. The relief which is pressed by Woolworths is of high order. The effects upon the defendant and his commercial life and his family, depending upon the decision in relation to fraudulent intent, cannot be overstated. 19 I have come to the decision that in this particular instance, notwithstanding the difficulty which I have in arguably accepting the whole of the submissions of Woolworths [centrally to the effect that the making of a deliberate tactical decision should redound against the defendant] that to reject the application would not be a proper exercise of the appropriate discretion. 20 To my mind, the present is one of those circumstances where there is a need for the court to permit each party to fully expose its evidentiary case. 21 One of the matters which has weighed most on my mind in determining what is the proper exercise of the discretion concerns the fact that in this particular case the court approached the taking of submissions in a reasonably extensive interchange with senior counsel for each of the parties on all manner of aspects of the evidence, the possibilities and the various ways in which one may look at and accept or reject certain evidence based on particular parameters. Throughout, as best I can recall it, all of that time, Mr Olson was in court. 22 Likewise, Mr Olson has been in court through the whole of this present application. 23 To my mind that consideration simply points up the difficulties of applications of the type here made. In short, Mr Olson's state of mind if he was to be further cross-examined in relation to this matter could not but be dramatically, it seems to me, affected by what he had heard said by the Judge and by the various senior counsel in relation to all manner of important considerations. Whether that does or does not turn out to be a factor, whether the plaintiff does or does not seek to recall Mr Olson is, as yet, unknown. 24 But it does seem to me that if Mr Olson is further cross-examined as a condition of the granting of this application, it may be appropriate for that factor to be taken into account in then determining whether and, if so, to what extent and for what reasons he should be entirely accepted or should be treated as a person whose state of mind may have been really affected by the submissions from the bar table prior to the making of the application for leave to reopen. 25 In all of the circumstances, and taking into account each of the matters raised by the respective parties, to my mind, [although this is a very difficult decision to reach and one which, it seems to me, in this case has been something which was extremely delicately balanced such that the exercise of the discretion could easily have been exercised the other way] the discretion should be exercised by allowing the application for leave to reopen. 26 I should make plain that I am not presently dealing with costs of that application nor, of course, am I presently dealing with costs of the whole of the proceedings. Those costs will be reserved until the further evidence has been taken. 27 Both parties will be given an opportunity following the handing down of the final judgment to address on the costs of this application. 28 The application to reopen is allowed. Costs of the application for leave to reopen are reserved.

I certify that paragraphs 1 - 28 is a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 15 September 2004 and revised on 21 September 2004

      Susan Piggott
      Associate
      21 September 2004

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